Restaurants beg for help from new UK Prime Minister Rishi Sunak
Amidst record inflation, soaring energy costs, and political upheaval, restaurants in the United Kingdom and Scotland are struggling to survive. As a result, U.K. hospitality businesses are seeking lower tax rates while Scottish hospitality businesses are partnering with seafood and other suppliers on a new campaign aimed to bolster sales.
Rishi Sunak was elected as U.K.’s new prime minister and officially took office on Tuesday, 25 October, after Liz Truss resigned on 20 October, just six weeks after taking office.
“The United Kingdom is a great country, but there is no doubt we face a profound economic challenge,” Sunak acknowledged in his first address on 24 October, per Associated Press. "We now need stability and unity, and I will make it my utmost priority to bring our party and our country together.”
UKHospitality Chief Executive Kate Nicholls said in a press release Sunak faces a significant challenge in turning the U.K. economy around.
“This is a critical time for hospitality businesses as they battle soaring energy costs, workforce shortages, and waning consumer confidence, so stable political leadership is absolutely critical,” Nicholls said.
The trade organization worked “very closely” with Sunak in his previous role as chancellor of the exchequer and “we look forward to working with him again to address the current strain on businesses and bolster consumer confidence,” Nicholls said.
“I would encourage him to extend business rates relief, reform the entire business rates system in the longer term, and lower the current rate of VAT,” Nicholls said. “Hospitality clearly displayed its ability to grow prior to the pandemic and was on the road to a strong recovery before the energy crisis hit. It can return to those levels through pragmatic decision-making that eases the acute challenges businesses are facing.”
The inflation rate in the U.K. increased to 10.1 percent in October 2022, hitting a 40-year high.
"[It] continu[ed] to put the hospitality sector under huge pressure,” Nicholls said. “Businesses across the country will be fighting to survive the winter.”
Though September's inflation figures traditionally being used to set tax changes and rates for the following year, Nicholls said doing so this year could be catastrophic.
“Such an increase at the same time as the risk of business rates reliefs ending could prove fatal for many," she said. "With hospitality inflation contributing heavily to the overall inflation rate, we now risk an inflationary spiral where our higher costs lead to higher taxes which lead to even higher prices."
Meanwhile, hotels and restaurants across Scotland have united with several the country’s leading producers and suppliers in a new “Help Out Hospitality” campaign inspired by the successful “Eat Out To Help Out”scheme rolled out by the U.K. government during the COVID-19 crisis.
Prompted by the recent increase in energy prices, the documented cost of living crisis, and the higher costs faced by businesses, the coordinated effort will provide customers with a range of dining and stay incentives from 24 October through November and potentially beyond, according to a press release.
The campaign includes 35 participating restaurants and hotels, foodservice supply firm The Full Range Director Barry Knight, who is spearheading the campaign, told SeafoodSource. The participating hotels and restaurants have received specific support on fish and seafood prices from Linlithgow, U.K.-based Campbells Prime and are building their own promotions and menus around the campaign, Knight said.
“Fish and chip shops have had to accept huge increases across all key product lines, while oil, energy, and labor costs have added extra pressure to margins. The [old method] used to [set] specific price points on menu items for so many years [is] no longer viable,” Knight said.
Help Out Hospitality was created to “not only to promote businesses over the quieter months but also to raise awareness to the real cost pressures businesses are facing,” Knight said.
“By leveraging our unique position in the marketplace, we have been able to negotiate a support package across a wide range of suppliers and manufacturers which allow our partner restaurants to run promotions throughout the month of November, in turn, encouraging diners to eat out and sustain foot [traffic] at a particularly vulnerable time for hospitality,” Knight said in a press release. “By involving suppliers in the process, we can drive meaningful change – generating discounts at the beginning of the process while removing commission on the other end; a real win-win for the industry, at the same time satisfying consumer demand for great value deals."
The original "Eat Out To Help Out" scheme was used by U.K. diners over 100 million times, generating over GBP 522 million (USD 597.8 million, EUR 601.5 million) in support for outlets U.K.-wide at a time of reduced consumer confidence helping to kick-start the hospitality industry post-lockdown, Knight said.
Photo courtesy of Scallop's Tale restaurant